Download Baird Core Intermediate Municipal Bond Fund Summary Prospectus

Baird Core Intermediate
Municipal Bond Fund
Trading Symbols:
BMNSX – Investor Class Shares
BMNIX – Institutional Class Shares
Summary Prospectus
May 1, 2017
View the following for this fund: Statutory Prospectus | Statement of Additional Information
Before you invest, you may want to review the Fund’s prospectus, which contains more information about the Fund and its
risks. You can find the Fund’s prospectus and other information about the Fund, including the Fund’s statement of
additional information and shareholder reports, online at http://www.bairdassetmanagement.com/baird-funds/funds-andperformance#Literature. You may also obtain this information at no cost by calling 1-866-442-2473 or by sending an email request to [email protected]. The Fund’s prospectus and statement of additional information, both dated
May 1, 2017, are incorporated by reference into this Summary Prospectus.
Investment Objective
The investment objective of the Baird Core Intermediate Municipal Bond Fund (the “Fund”) is to seek a high level of
current income that is exempt from federal income tax and is consistent with preservation of capital.
Fees and Expenses of the Fund
The table below describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
Shareholder Fees
(fees paid directly from your investment)
None
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Investor
Class Shares
_________
0.25%
0.25%
0.05%
______
0.55%
Management Fees
Distribution and Service (12b-1) Fees
Other Expenses
Total Annual Fund Operating Expenses
Institutional
Class Shares
_________
0.25%
None
0.05%
______
0.30%
Example
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other
mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that
the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
1 Year
$56
$31
Investor Class Shares
Institutional Class Shares
3 Years
$176
$ 97
5 Years
$307
$169
10 Years
$689
$381
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A
higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in total annual fund operating expenses or in the example,
affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 94.8% of the
average value of its portfolio.
Principal Investment Strategies
The Fund normally invests at least 80% of its net assets in municipal bonds and debentures, the income from which is
exempt from federal income tax (including the federal alternative minimum tax (“AMT”)). These municipal obligations
may include debt obligations of states, territories, and possessions of the U.S., as well as political subdivisions, agencies
and financing authorities thereof that provide income exempt from federal income tax (including the federal AMT).
The Fund invests in a broadly diversified portfolio of federally tax-exempt municipal obligations issued by governmental
authorities throughout the U.S. and its territories. The Fund may invest in all types of municipal obligations, including
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pre-refunded bonds, general obligation bonds, revenue bonds, and municipal lease participations. The Fund may also
invest in zero coupon bonds, which are issued at substantial discounts from their value at maturity and pay no cash
income to their holders until they mature. Municipal obligations in which the Fund invests may include fixed, variable
or floating rate instruments. The Fund may purchase municipal obligations on a when issued or delayed delivery basis or
enter into forward commitments to purchase municipal obligations.
The Fund invests principally in investment grade municipal obligations, rated at the time of purchase by at least one
major rating agency, but may invest up to 10% of its net assets in non investment grade municipal obligations
(sometimes referred to as “high yield” or “junk” bonds). The Fund may also invest in unrated municipal obligations that
are determined by Robert W. Baird & Co. Incorporated (the “Advisor”) to be comparable in quality to the rated
obligations. After purchase, a municipal obligation may cease to be rated or may have its rating reduced below the
minimum rating required by the Fund for purchase. In such cases, the Advisor will consider whether to continue to hold
the municipal obligation. The Fund may hold municipal obligations with a “D” or similar credit rating indicating at
least a partial payment default.
The Advisor attempts to keep the duration of the Fund’s portfolio substantially equal to that of its benchmark, the
Bloomberg Barclays (1-15 Year) Municipal Bond Index. The duration of the Fund’s benchmark as of March 31, 2017
was 4.88 years. While obligations of any maturity may be purchased, under normal circumstances, the Fund’s dollar
weighted average effective maturity is generally expected to be between three and ten years. Effective maturity takes into
account the possibility that a bond may have prepayments or may be called by the issuer before its stated maturity date.
Principal Risks
Please be aware that you may lose money by investing in the Fund. The following is a summary description of certain
risks of investing in the Fund.
Management Risks
The Advisor may err in its choices of debt obligations or portfolio mixes. Such errors could result in a negative return
and a loss to you.
Bond Market Risks
A bond’s market value may be affected significantly by changes in interest rates – generally, when interest rates rise, the
bond’s market value declines and when interest rates decline, its market value rises (“interest rate risk”). Generally, a
bond with a longer maturity will entail greater interest rate risk but have a higher yield. Conversely, a bond with a
shorter maturity will entail less interest rate risk but have a lower yield (“maturity risk”). A bond’s value may also be
affected by changes in its credit quality rating or the issuer’s financial condition (“credit quality risk”). Bonds are also
generally subject to credit risk that an issuer will not make timely payments of principal and interest.
Call Risks
If the securities in which the Fund invests are redeemed by the issuer before maturity (or “called”), the Fund may have to
reinvest the proceeds in securities that pay a lower interest rate, which may decrease the Fund’s yield. This will most likely
happen when interest rates are declining.
Credit Quality Risks
Individual issues of municipal obligations may be subject to the credit risk of the municipality, borrower or issuer
(“obligor”). Therefore, the obligor may experience unanticipated financial problems and may be unable to meet its
payment obligations. Municipal obligations held by the Fund may be adversely affected by political and economic
conditions and developments (for example, legislation reducing state aid to local governments). Debt obligations
receiving the lowest investment grade rating may have speculative characteristics and, compared to higher grade debt
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obligations, may have a weakened capacity to make principal and interest payments due to changes in economic
conditions or other adverse circumstances. Ratings are essentially opinions of the credit quality of an issuer and may
prove to be inaccurate.
Non-Investment Grade Quality Risks
Non-investment grade debt obligations (sometimes referred to as “high yield” or “junk” bonds) involve greater risk than
investment-grade debt obligations, including the possibility of default or bankruptcy. They tend to be more sensitive to
economic conditions than higher-rated debt obligations and, as a result, are generally more sensitive to credit risk than
debt obligations in the higher-rated categories.
Municipal Obligations Risks
Municipal obligations are subject to risks based on many factors, including economic and regulatory developments,
changes or proposed changes in the federal and state tax structure, deregulation, court rulings, and other factors. The
value of municipal obligations may be affected more by supply and demand factors or the creditworthiness of the issuer
than by market interest rates. Repayment of municipal obligations depends on the ability of the issuer or project backing
such obligations to generate taxes or revenues. There is a risk that interest may be taxable on a municipal obligation that
is otherwise expected to produce tax-exempt interest.
Because the Fund may invest more than 25% of its total assets in municipal obligations issued by entities located in the
same state or the interest on which is paid solely from revenues of similar projects, changes in economic, business or
political conditions relating to a particular state or type of projects may have a disproportionate impact on the Fund.
The repayment of principal and interest on some of the municipal obligations in which the Fund may invest may be
guaranteed or insured by a monoline insurance company. If a company insuring municipal obligations in which the
Fund invests experiences financial difficulties, the credit rating and price of the security may deteriorate.
Municipal Housing Bonds Risks
Municipal housing bonds are bonds issued by state and municipal authorities established to purchase single family and
other residential mortgages from commercial banks and other lending institutions. Certain factors and adverse economic
developments may affect the mortgagor’s ability to maintain payments under the underlying mortgages. Mortgages may
also be partially or completely prepaid prior to their final stated maturities.
Municipal Lease Obligations Risks
Participation interests in municipal leases pose special risks because many leases and contracts contain “non
appropriation” clauses that provide that the governmental issuer has no obligation to make future payments under the
lease or contract unless money is appropriated for this purpose by the appropriate legislative body.
Zero Coupon Bonds Risks
Zero coupon bonds do not pay interest on a current basis and may be highly volatile as interest rates rise or fall. In
addition, while such bonds generate income for purposes of generally accepted accounting standards, they do not
generate cash flow and thus could cause the Fund to be forced to liquidate securities at an inopportune time in order to
distribute cash, as required by tax laws.
When-Issued, Delayed Delivery and Forward Commitments Risks
When-issued, delayed delivery and forward commitment transactions involve the risk that the price or yield obtained in a
transaction (and therefore the value of a debt obligation) may be less favorable than the price or yield (and therefore the
value of a debt obligation) available in the market when the debt obligations delivery takes place. Failure of the other
party to consummate the trade may result in the Fund incurring a loss or missing an opportunity to obtain a price
considered to be advantageous.
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Tax Risks
Municipal obligations may decrease in value during times when federal income tax rates are falling. The Fund’s
investments are affected by changes in federal income tax rates applicable to, or the continuing federal tax-exempt status
of, interest income on municipal obligations. Any proposed or actual changes in such rates or exempt status, therefore,
can significantly affect the liquidity, marketability and supply and demand for municipal obligations, which would in
turn affect the Fund’s ability to acquire and dispose of municipal obligations at desirable yield and price levels.
Liquidity Risks
Certain debt obligations may be difficult or impossible to sell at the time and price that the Advisor would like to sell.
The Advisor may have to lower the price, sell other debt obligations or forego an investment opportunity, any of which
may have a negative effect on the management or performance of the Fund.
Valuation Risks
The prices provided by the Fund’s pricing services or independent dealers or the fair value determinations made by the
valuation committee of the Advisor may be different from the prices used by other mutual funds or from the prices at
which debt obligations are actually bought and sold. The prices of certain debt obligations provided by pricing services
may be subject to frequent and significant change, and will vary depending on the information that is available.
Sector Risks
From time to time, based on market or economic conditions, the Fund may have significant positions in specific sectors
of the market. Potential negative market or economic developments affecting one or more of these sectors could have a
greater impact on the Fund than on a fund with fewer holdings in that sector.
Recent Market Events
The Federal Reserve began raising its policy rate, the overnight Federal Funds rate, in late 2015. There is uncertainty
regarding how quickly the Federal Reserve will raise the Federal Funds rate and how the financial markets will react.
Additionally, at this time, it is difficult to predict the legislative and regulatory changes that will result from the
combination of a new President of the United States and the first year since 2010 in which both Houses of Congress and
the White House are from the same political party. There is uncertainty regarding how the financial markets will react to
any changes, and there is the potential that these changes could negatively affect financial asset prices and generate higher
interest rates, increased market volatility and reduced value and liquidity of certain securities. As a result, the risk
environment remains elevated. The Advisor will monitor developments and seek to manage the Fund in a manner
consistent with achieving the Fund’s investment objective, but there can be no assurance that it will be successful in
doing so.
Performance
The performance information provides some indication of the risks of investing in the Fund by showing the Fund’s
performance for the past calendar year and by showing how the Fund’s average annual returns for one year and since
inception compare with those of a broad measure of market performance. Past performance, before and after taxes, is
not necessarily an indication of how the Fund will perform in the future. Updated performance information is available
on the Fund’s website at www.bairdfunds.com or by calling the Fund toll free at 1-866-442-2473.
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Calendar Year Return for Institutional Class Shares
10.00%
8.00%
6.00%
4.00%
2.00%
1.14%
0.00%
-2.00%
-4.00%
2016
Best quarter:
Worst quarter:
2nd quarter 2016
4th quarter 2016
2.50%
-2.82%
Average Annual Total Returns as of December 31, 2016
Institutional Class
Return Before Taxes
Return After Taxes on Distributions
Return After Taxes on Distributions and Sale of Fund Shares
Investor Class
Return Before Taxes
Bloomberg Barclays Municipal Bond (1-15 Year) Index
(reflects no deduction for fees, expenses or taxes)
1 Year
______
Since Inception
(8/31/15)
____________
1.14%
0.84%
1.42%
2.35%
2.07%
2.09%
0.91%
2.11%
0.01%
1.38%
After-tax returns are shown only for Institutional Class shares, and the after-tax returns for Investor Class shares will vary.
After-tax returns are calculated using the highest individual federal marginal income tax rates and do not reflect the
impact of state and local taxes. Your actual after-tax returns depend on your tax situation and may differ from those
shown. After-tax returns are not relevant if you hold your shares through a tax-deferred account, such as a 401(k) plan or
an individual retirement account.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital
loss occurs upon the redemption of Fund shares and provides an assumed tax benefit that increases the after-tax return.
Investment Advisor
Robert W. Baird & Co. Incorporated is the Fund’s investment advisor.
Portfolio Managers
Name
_____
Duane A. McAllister, CFA
Portfolio Manager
of the Fund Since
_______________
2015
Erik R. Schleicher
2015
Portfolio Manager for Baird Advisors
and Vice President of the Advisor
Joseph J. Czechowicz
2015
Portfolio Manager for Baird Advisors
and Vice President of the Advisor
Title
____
Senior Portfolio Manager for Baird Advisors
and Managing Director of the Advisor
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Purchase and Sale of Fund Shares
You may purchase or redeem shares of the Fund on any day the New York Stock Exchange (the “NYSE”) is open by written request
via mail (Baird Funds, Inc. c/o U.S. Bancorp Fund Services, LLC, P.O. Box 701, Milwaukee, WI 53201-0701) or overnight
delivery (Baird Funds, Inc. c/o U.S. Bancorp Fund Services, LLC, 615 E. Michigan Street, Third Floor, Milwaukee, WI 53202), by
wire transfer, by telephone at
1-866-442-2473, or through a financial intermediary. Purchases and redemptions by telephone are only permitted if you
previously established these options on your account.
The minimum initial and subsequent investment amounts are shown below, although the Fund may reduce or waive them in
some cases in its discretion.
Initial
Purchase
Investor
Class
$1,000 – Individual
Retirement Accounts
(Traditional/Roth/SIMPLE/
SEP IRAs) and Coverdell
Education Savings Account
$2,500 – All Other Accounts
Institutional $25,000 – All Account
Class
Types
Subsequent
Purchases
$100
$100
No minimum
Tax Information
The Fund’s distributions may be subject to federal income tax and may be taxed as ordinary income or long term capital
gains. The Fund intends to make distributions that are primarily exempt from federal income tax. However, some of the
Fund’s distributions may be taxed as ordinary income or long term capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase Fund shares through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related
companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of
interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website for more information.